Vietnam raises rice price, Manila says to buy in Q1

* Manila says to import rice in Q1

* Thai firms seen selling up to 200,000 tonnes

* Vietnam-Manila rice pact extended to 2013

By Ho Binh Minh and Erik dela Cruz

HANOI/MANILA, Jan 10 (Reuters) - Vietnam raised the minimum price of its export-grade rice on Monday ahead of negotiations with the Philippines, which said it plans to bring forward purchases to the first quarter.

Indonesia also entered the market, looking for at least 170,000 tonnes of Thai rice for delivery in January to March. [ID:nL3E7CA0P6]

"Realistically, we could wait until probably the second quarter because of our huge inventory. But there is no certainty that prices will go down in the second quarter," Angelito Banayo, administrator of the Philippines National Food Authority, told Reuters.

The Philippines, the world's top rice importer, has a deal until 2013 to buy rice from Vietnam, Asia's second biggest exporter, and could also buy from top exporter Thailand and even Cambodia, Banayo said. [ID:nSGE706025]

The Vietnam Food Association (VFA) raised the minimum price for 25 percent broken rice by 1 percent to $495 a tonne from the $490 in place since Dec. 27, after a 14 percent increase last month. [ID:nHAN442419]

The new minimum, which applies to shipments in January and February, puts a floor under prices ahead of the harvest next month and March.

"The move has created a new price level in preparation for negotiations with the Philippines," said a Vietnamese trader with a foreign company in Ho Chi Minh City.

However, a fall in prices over the course of last year means the price of the Vietnam's top export grade is up only 6.5 percent on the year.

CHANCE FOR THAI, CAMBODIAN RICE

While Banayo said he had brought forward plans to purchase because there was no certainty that prices would go down, the Philippines is not in the same situation as last year, when it was struggling to secure supplies in December 2009 after severe weather damaged its domestic crop.

It imported a record 2.45 million tonnes of the grain to meet its 2010 needs, mostly from Vietnam, but while it has yet to spell out its 2011 import plan in detail, has said it would buy no more than half that volume this year.

Exporters in Thailand, whose main crop is reaching a peak, said that Philippine purchases in the first quarter would be good for them, although they were not sure of selling big amounts.

Thai rice prices look a bit cheaper than Vietnamese prices, given the new floor in Vietnam, but traders in Thailand said Vietnamese exporters were likely to win the bulk of the tender as they could source cheaper rice from Cambodia.

"I expect Thai exporters to win a combined 100,000-200,000 tonnes at best," said Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association.

Thai 25 percent broken rice was quoted on Monday at $470 a tonne, steady versus last week and around 3 percent down from recent weeks. Thailand's benchmark 100 percent B grade white rice costs $535 a tonne, having fallen 13 percent in 2010.

MAJOR HARVEST IN FEBRUARY

The VFA left the floor for Vietnam's 5 percent broken rice unchanged at $520 a tonne, free on board Saigon Port.

Last Tuesday, the food association said demand from the Philippines could reach 1.5 million tonnes this year, and Vietnam hoped to secure contracts for 1 million tonnes. [ID:nHAN341672]

Vietnam could have 6.6 million tonnes of rice available for export this year, so shipments could be higher than an initial estimate of 6.0 million tonnes, a state-run newspaper reported last week. [ID:nHAN279630]

The floor price rise comes shortly before Vietnam starts harvesting its largest, winter-spring crop, late next month and traders had expected domestic prices to soften as supply increased.

Ample supplies from Thailand and Vietnam are likely to keep prices in check in the first quarter, sparing Asia's staple food from the surge in commodity prices that has pushed food inflation up policymakers' agenda.

Cuba, another traditional buyer of Vietnamese rice, said on Friday that its production of the grain fell 12.2 percent last year to 247,400 tonnes, which could lead to higher imports this year. [ID:nN07198016]

(Source: http://www.forexyard.com/en/news/Vietnam-raises-rice-price-Manila-says-to-buy-in-Q1-2011-01-10T111210Z-WRAPUP-2)